A crowd finance platform is closing its doors, but not without passing on what it’s learnt along the way.
Lendoor, which aimed to make it easy for small business entrepreneurs to crowdfund low-interest loans by borrowing small amounts from friends, family and fans, is selling off its business assets.
We spoke with Lendoor founder and CEO, Viktoria Krane, on what was behind the decision. She told us the platform had been unable to gain sufficient deal flow due to marketing budget constraints.
Key amongst the assets available is the technology behind the Lendoor crowd finance platform. Buyers who want to set up their own crowd finance platform can rebrand the existing technical infrastructure and avoid the time, cost overruns and development risks associated with developing substantial, scalable and secure software.
After announcing the closure, Viktoria – who has a background in both traditional credit and crowd finance – found many people in the industry wanted to hear about her experiences.
It became apparent she hadn’t been alone in finding deal flow a critical issue. She is convinced the key to success for any crowd finance platform is the ability to attract campaigns through innovative and cost effective marketing. In the case of marketplace type platforms, the challenge is even bigger - sourcing investment quality deals and finding investors. Anecdotally, we at Crowdsurfer, have heard similar things, but there is a reluctance to speak openly about the challenges facing platforms.
"There is a lot of talk about crowd finance, but not enough campaigns yet."
Viktoria believes that education is the key to ensuring future growth. Entrepreneurs aren't always aware that crowd finance is a viable option to fund their operations. Even if they are, there’s often an expectation that successful campaigns just happen, even in the absence of a fundable business proposition and marketing plan. By better-educating entrepreneurs, the industry can benefit from increased deal flow.
Despite the decision to close Lendoor, Viktoria believes crowd finance has a very bright future. Many in the US thought the sector would boom as soon as regulations were introduced (Title III of the JOBS Act, 2015). This explosion has yet to materialise, however, Viktoria believes growth will happen – it may just take longer than anticipated. By sharing her experiences and insights with other platform owners, Victoria is continuing to contribute to the growth of the crowd finance industry.
For more information about Lendoor and its asset sale, please contact Viktoria Krane.